In a state renowned for a vibrant, laissez faire medical market full of caregivers, Maine’s adult use market is approaching a pivotal moment, having grown to the point where the state is ready to take off the cultivation training wheels.
The state is approaching the two-year anniversary of the first issuance of an adult use cultivation license. As part of that anniversary, the state will stop allowing the transfer of plants and seeds from the state’s medical program. At this point, the state has 72 adult use cultivators selling to 101 retail stores, so it is time to see if the state’s adult use supply can stand on its own.
Although a common refrain in states with nascent adult use markets is that the biggest competition comes from illicit sellers. In Maine, that competition largely comes from the medical caregiver market.
Last month I spent a week in Maine, which gave me a chance to check out one of the state’s adult use retail stores. As a Bay Stater, I’ve visited Maine plenty of times, but this was my first trip since the state finally allowed the first adult use shops to open.
I was staying close to Acadia in Southwest Harbor, about two hours northeast of Portland, in what I was told is the “quiet part” of Mt. Desert Island. When looking for a dispensary from the closest highway, I passed Curaleaf in part of the local Wal-Mart parking lot, and drove past yet another caregiver storefront playing on the THC acronym, eventually finding Meristem, a small adult use shop in Southwest Harbor, within minutes, ironically, of where I stayed for the week.
As we have previously reported, about 9% of Maine’s adult population are registered as medical cannabis patients. With the vibrant caregiver market, a significant chunk of Maine’s consumer market seems to have little need for an adult use market, especially one that is beholden to mandatory testing.
Maine voters legalized cannabis in 2016 through a ballot measure, which required the legislature to then craft a framework for legal weed in a functioning market. At the time, Republican Governor Paul LePage adamantly opposed legal cannabis and vetoed initial efforts to legislate a market, but his final term ended in January 2019, and over a year later, in October, 2020, the first adult use stores were finally able to open.
Meanwhile, medical cannabis has been legal in Maine since 1999.
From what seems to have once been the back half of the storage area in the adjacent craft beer shop, Meristem sells all of the common weed products you might expect; bud, gummies, oils, etc. Both businesses are owned by the same family.
The tiny shop feels more like a pop-up of questionable legitimacy when compared to the many Massachusetts dispensaries that seem like secured compounds with multiple locked doors and ID checks.
The general manager at Meristem, Joel Emery, was kind enough to chat for a few minutes about the business and the broader challenges that Maine’s adult use market faces, especially with a vibrant caregiver market with competing storefronts.
Over 9% of all Maine adult residents have medical cannabis cards, according to state data, so despite not being able to sell to everyone, medical cannabis has a strong, built-in market helped by the lack of taxes, no mandatory lab testing or seed-to-sale tracking, that allows medical shops undercut adult use prices.
“I totally get not wanting to pay taxes, but they want to run retail shops without having to follow the same rules as us,” said Meristem’s Emery.
As of August 16, the state had 72 active cultivation licenses and 101 active adult use store licenses in operation. Simultaneously there are 24 active medical dispensaries and 2,758 registered caretakers, many of whom have active storefronts, after a 2018 law allowed them to open, as long as the respective caregivers continue to limit their clientele to a limited number of medical card holders, regardless of their state of origin. Unlike many other states, Maine allows medical cannabis providers to accept out of state medical patients.
Adult use shops can cater to all residents, assuming they are at least 21 years old, but must also follow strict guidelines for testing all cannabis, tracking the products and maintaining a state’s mandated minimum for security systems.
Despite the hurdles, Emery is optimistic about the state’s growing market.
“I think people like the reassurance of testing,” he said. Emery added he expects growth in the market as cannabis becomes normalized and more people decide to try their first dose of THC.
A common piece of advice for Massachusetts cannabis users looking for good deals is to get a medical card and “go to Maine.” At this point, adult use prices in Maine are comparable to Massachusetts’, despite having half as many operating cultivators.
Maine adult use operators are still trying to catch up to caregiver prices, and upcoming regulatory updates from the Office of Cannabis Policy, such as fewer required lab tests could further improve the adult use market’s competitiveness against medical weed.
Employees from several different adult use dispensaries in the state that I spoke with agreed that prices were dropping across the board. This trend is confirmed by data from the state’ Office of Cannabis Policy.
The average price of bud in July was $9.06 per gram. Just one year ago in August 2021, that rate was $12.85 per gram. Just next door in Massachusetts, which has an older adult use market and many more cultivation licenses, continues to trail Maine in terms of pricing. A gram of bud cost an average of $10.58 in June, which is the latest month of data provided from the Bay State’s Cannabis Control Commission.
Maine has the lowest adult use tax in the region at 10%. Massachusetts charges 20%, which includes an optional 3% for municipalities, Rhode Island will charge 20%, Vermont will charge 14% and Connecticut will charge 19.35% to 24.35% with the variance based on THC content. Despite this advantage, 10% is still higher than 5.5% sales tax, which is the only tax on medical cannabis. Medical caregivers also do not have the added overhead cost of mandatory seed to stem tracking.
Adult use is also going to be able to start delivering in the next few months, according to a guidance letter the Office of Cannabis Policy sent to municipalities last week so that they can prepare. This is another aspect in which adult use will start to be able to better compete with caregivers, who are already free to deliver.
Caregivers also have a leg up on adult use in that they have the freedom of opening in any municipality in the state. Meanwhile, most of those same municipalities opted out of allowing adult use cannabis. In response, the OCP recently offered to pay municipalities $20,000 to cover any unexpected costs if they decide to opt in allowing adult use cannabis businesses.
“Maine’s launch of the adult use cannabis program has been strong, but the benefits are still only being realized by about 10% of Maine’s cities and towns,” wrote OCP Executive Director Erik Gundersen in a memo announcing the program. “From a recent report commissioned by the OCP, we know that the presence of adult use retail stores and other facilities is the most responsible way to continue to eradicate the illicit market, while it has not shown to increase negative public health and safety impacts, such as cannabis use disorder and driving under the influence of cannabis.”
Out of staters may be able to buy from caregivers if they have a medical licenses from any other state where medical weed is legal, but Maine, which is famously known as Vacation Land, has a large pool of potential adult use customers coming from (an ever dwindling number of) states where cannabis is still illegal.
As we spoke, a vacationer in her 40s, walked into the tiny shop and stared at one of the menus available on the counter. It was her first time buying weed and she was trying to figure out which pack of 10mg gummies she wanted to buy.
She wasn’t interested in terpene profiles or whether or not the gummies passed lab inspection, as much as she was trying to decide between blue raspberry and blood orange, but she is clearly one of the many cannabis newcomers that Emery said will help Maine’s adult use market grow amid a sea of caregivers. Also, the blood orange had a better flavor.